BEIJING Dec 7 Chinese banking regulators are
concerned that the failure of an investment product sold through
a Hua Xia Bank Co Ltd branch could shatter depositor
confidence, three sources told Reuters after a heated,
closed-door meeting late on Thursday.
The China Banking Regulatory Commission has decided to hold
off on any ruling regarding the Hua Xia case, however, until the
conclusion of a police investigation, the sources said.
In the meantime, representatives of every Chinese bank will
be summoned in for "guidance" on risk management, they said.
"The Hua Xia and Zhongding case has made regulators furious.
It has raised the risk of a crisis of confidence in the wealth
management products issued by Chinese banks, and has exposed
partial failures in the banks' internal risk controls," one of
the sources told Reuters.
The CBRC did not immediately respond to a request for
Investors rushed to Hua Xia's Jiading branch in a suburb of
Shanghai after one of four wealth management products issued by
the Zhongding Wealth Investment Center failed to pay out as
scheduled on Nov. 26.
Although the products clearly said that neither principal
nor interest was guaranteed, the case is a test for regulators
grappling with the widespread perception by depositors that
banks stand by any wealth management or trust product they
Hua Xia, partly owned by Deutsche Bank AG, said
an employee in the Jiading branch was selling the products
without authorisation. Her husband disputes that claim. The
employee is in police custody.
(Reporting By Hongmei Zhao and Lucy Hornby; Editing by Edmund